23/06/2021
How are Water ETFs and Companies fizzing up the financial markets post celebrities encourage drinking water over other carbonated drinks.
Water has been making to news, of late, following a slew of recent memes on Cristiano Ronaldo. The famous professional footballer kept the Coke bottles aside after frowning at them and lifted the water bottle, exclaiming âĂgua,â Portuguese word for water, in a bizarre Euro 2020 moment.
This hurt Coca Cola wiping over $4 billion from its valuation. Similar gigs from notable footballers like Paul Pogba and Manuel Locatelli have brought limelight on water companies and water ETFs.
Interestingly, per a Grand View Research report, the global bottled water market is expected to expand at a CAGR of 11.1% between 2021 and 2028, driven by increasing focus on health consciousness and convenience in portability, usage, and installation process.
Moreover, going by latest research report from Marketsandresearch.biz, the global alkaline water ionizer size was valued at $2277.1 million in 2020, and is estimated to expand at a CAGR of 7.9% for the subsequent five years.
It is important to note that per the latest UN World Water Development Report 2021, the world will face a global water deficit of 40% by 2030, per independent assessments.
Although, technologies are evolving to promote reduced water consumption, the broadening gap led by increasing demand and reduction in supply, necessitates the immense value of water as a commodity, as well.
According to a latest Fortune Business Insights report the global water and wastewater treatment market size is expected to hit $465.23 billion by 2028 from $263.07 billion valuation in 2020, at a CAGR of 7.3% between 2021 and 2028.
Given the encouraging backdrop, investors are looking to diversify their portfolio and make room for water related financial alternatives.
Here we discuss three companies capitalizing on the growing significance of enhanced drinkable water and wastewater services for restoration.
Pentair offers end-to-end smart, sustainable water solutions, encompassing the journey of great tasting water straight from the kitchen faucet to industrial water management and everywhere in between.
The companyâs offerings ensure access to clean, safe water for customers, and smart technology facilitates recovery and reuse of water, consequently reducing its consumption.
Moreover, coronavirus crisis led stay-at-home wave fueled spending on backyards and home improvement to involve home-bound leisure. As a result, the companyâs pool business which includes pool and spa water solutions is witnessing sturdy growth and remains a key catalyst.
American Water Works Company is a notable water supply and wastewater service provider. As of Dec 31, 2020, the company operates 609 groundwater treatment plants; 150 wastewater treatment facilities; 53,200 miles of transmission, distribution, and collection mains and pipes; 1,100 groundwater wells; as well as 75 dams; to serve the expanding customer base in the United States.
In Homeowner Services domain, the company is serving around 3 million contracts and 1.5 million customers.
As a part of its capital plan, the company intends to invest $22-$25 billion over the 2021-2030 decade, which includes $3-$4 billion in regulated acquisitions, in a bid to fortify, and enhance its water and wastewater infrastructure.
Nestlé S.A. , a notable food and beverage company, offers bottled water under its Perrier, Pure Life, Poland Spring, and S.Pellegrino brands. In March 2021, the company acquired Essentia as a part of its ongoing transformation in its global water business, and consequently expanding presence in premium functional water segment.
Management anticipates that the divesting the Nestlé Waters North America business and the buyout of Essentia, will help the company to focus properly on international premium brands; differentiated healthy hydration products, such as functional water; and local natural mineral waters. This more focused approach positions Nestlé Waters business well to tap growth avenues with differentiated consumers around the world.
It also makes sense to keep a track of the following three water ETFs poised to benefit from growing awareness pertaining to water.
First Trust Water ETF (FIW) : The multi-cap ETF follows the ISE Clean Edge Water Index. The index comprises exchange-listed companies that earn a substantial portion of revenues from the potable and wastewater industry. Notably, the fund's top three holdings are Pentair, Roper Technologies and Xylem.
Invesco S&P Global Water Index ETF (CGW) : This ETF tracks the S&P Global Water Index. It offers exposure to advanced market securities including water utilities, equipment, infrastructure, materials, and instruments. Notably, the fund's top three holdings are American Water Works Company, Xylem, and Veolia Environnement.
Invesco Global Water ETF (PIO) : This fund follows the Nasdaq OMX Global Water Index. The ETF comprises companies working towards facilitating the access to clean water. Notably, its top three holdings include Danaher Corporation, Ecolab and Geberit AG.
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